European Shares Likely To Drift Lower On Rate Worries

(RTTNews) - European stocks may drift lower at open on Friday as strong U.S. data released overnight coupled with hawkish Fed remarks fueled inflation and rate-hike worries.

Asian markets followed Wall Street lower after two Fed officials warned of additional hikes in borrowing costs to lower inflation back to the central bank's 2 percent target.

Fed President Loretta Mester said there is need for more tightening to tame inflation.

Separately, St. Louis Fed President James Bullard argued that there was a good case for the Fed to have been more aggressive with its recent rate decision.

The dollar jumped to a six-week high on increased risk aversion.

Gold dipped as the benchmark 10-year U.S. Treasury yield climbed to a high of 3.900 percent, marking its highest since Dec. 30 on expectations that U.S. rates may peak just below 5.3 percent by July-end.

Oil prices fell over 1 percent in Asian trading to extend recent losses on signs of sluggish U.S. consumer demand and data showing a big build in stockpiles.

U.S. stocks fell sharply overnight, the dollar advanced and yields ticked up as initial jobless claims data showed a resilient labor market and a key metric showed wholesale prices increased more than expected in January.

The Dow lost 1.3 percent, the tech-heavy Nasdaq Composite shed 1.8 percent and the S&P 500 slipped 1.4 percent.

European stocks finished slightly higher on Thursday despite ECB President Christine Lagarde once again affirming a 50-bps rate hike in March.

The pan-European STOXX 600 gained 0.2 percent. The German DAX and the U.K.'s FTSE 100 index both inched up around 0.2 percent while France's CAC 40 index climbed 0.9 percent.